involved must be ripened for judicial determination. (Tolentino vs.
Board of
EN BANC
[G.R. No. L-8964. July 31, 1956.]
JUAN EDADES, Plaintiff-Appellant, vs. SEVERINO EDADES, ET
AL., Defendants-Appellees.
BAUTISTA ANGELO, J.:
Plaintiff brought this action before the Court of First Instance of Pangasinan seeking
a declaratory judgment on his hereditary rights in the property of his alleged father
and incidentally the recognition of his status as an illegitimate son of Emigdio
Edades.
In his complaint, he alleges that he is an illegitimate son of Emigdio Edades with
Maria de Venecia, having been born when said Emigdio Edades was legally married
to Maxima Edades with whom Emigdio had eight legitimate children; chan
roblesvirtualawlibrarythat he had always enjoyed the continuous and uninterrupted
possession of the status of illegitimate child by direct and positive acts of his father
and of the legitimate children of the latter; chan roblesvirtualawlibrarythat as such
illegitimate child he is entitled to share in the inheritance of his father under the
law; chan roblesvirtualawlibraryand that as the legitimate children of his father will
deny, as in fact they have denied his right to inherit, and such denial may ripen into a
costly litigation, he brought the present action for the determination of his hereditary
rights.
Defendants, instead of answering, filed a motion to dismiss on the ground that the
complaint does not state facts sufficient to constitute a cause of action. The court
sustained the motion holding that “An action for declaratory relief just for the purpose
of clearing away doubt, uncertainty, or insecurity to the Plaintiff’s status or rights
would seem to be improper and outside the purview of a declaratory relief. Neither
can it be availed of for the purpose of compelling recognition of such rights, if
disputed or objected to.” Consequently, the court dismissed the complaint, without
costs. From the order of dismissal, Plaintiff has appealed and the case was certified
to this court because only questions of law are involved in the appeal.
Under the law, an action for declaratory relief is proper when any person is interested
“under a deed, will, contract or other written instrument, or whose rights are affected
by a statute or ordinance” in order to determine any question of construction or
validity arising under the instrument or statute, or to declare his rights or duties
thereunder (section 1, Rule 66). Moreover, the action should be predicated on the
following conditions: (1) there must be a justiciable controversy; (2) the controversy
must be between persons whose interest are adverse; (3) the party seeking
declaratory relief must have a legal interest in the controversy; and (4) the issue
1
Accountancy, 90 Phil., 83).
The present case does not come within the purview of the law authorizing an action
for declaratory relief for it neither concerns a deed, will, contract or other written
instrument, nor does it affect a statute or ordinance, the construction or validity of
which is involved. Nor is it predicated on any justiciable controversy for admittedly
the alleged rights of inheritance which Plaintiff desires to assert against
the Defendants as basis of the relief he is seeking for have not yet accrued for the
simple reason that his alleged father Emigdio Edades has not yet died. In fact, he is
one of the herein Defendants. And the law is clear that “the rights to the succession
are transmitted from the moment of the death of the decedent” (Article 777, new Civil
Code). Up to that moment, the right to succession is merely speculative for, in the
meantime, the law may change, the will of the testator may vary, or the
circumstances may be modified to such an extent that he who expects to receive
property may be deprived of it. Indeed, the moment of death is the determining point
when an heir acquires a definite right to the inheritance (5 Manresa, 5th ed., 324).
This action therefore cannot be maintained if considered strictly as one for
declaratory relief.
But the present action, though captioned as one for declaratory relief, is not merely
aimed at determining the hereditary right of the Plaintiff to eventually preserve his
right to the property of his alleged father, but rather to establish his status as
illegitimate child in order that, should his father die, his right to inherit may, not be
disputed, as at present, by the other Defendants who are the legitimate children of
his father. In fact, in paragraph 2 of complainant’s prayer he asks that Defendants be
ordered to recognize his status as illegitimate child with right to inherit. It is true that
there is no express provision in the new Civil Code which prescribe the step that may
be taken to establish such status as in case of a natural child who can bring an
action for recognition (Article 285), but this silence notwithstanding, we declare that a
similar action may be brought under similar circumstances considering that an
illegitimate child other than natural is now given successional rights and there is
need to establish his status before such rights can be asserted and enforced. This
right is impliedly recognized by Article 289 which permits the investigation of the
paternity or maternity of an illegitimate child in the same manner as in the case of a
natural child. Considering that the rules of procedure shall be liberally construed to
promote their object and avoid an expensive litigation (section 2, Rule 1), we hold
that the present action may be maintained in the light of the view herein expressed.
Wherefore, the order appealed from is revoked. The case is remanded to the trial
court for further proceedings in connection with the determination of the alleged
status of the Plaintiff as an illegitimate son of Emigdio Edades, without
pronouncements as to costs.

G.R. No. L-15509 March 31, 1962
SEBASTIAN SARMIENTO, ET AL., petitioners-appellees,
vs.
HON. ELEUTERIO CAPAPAS, as Commissioner of Customs, et al., respondents-
appellants,
GREGORIO GAMULO, ET AL., intervenors-appellees.
LABRADOR, J.:
Appeal from a decision of the Court of First Instance of Ilocos Norte, Hon. Delfin B.
Flores, presiding, in Civil Case No. 2790 of that court, declaring the nullity of Barter
Permit No. BT-1380 (SP) issued to the Philippine Tobacco Flue-Curing and Redrying
Corporation (hereinafter called PTFRC) and all the importations made thereunder,
and ordering the forfeiture to the Government of said importations.
The original action in this case was presented on May 28, 1958 and the petition
seeks the issuance of an injunction against the respondent Collector of Customs and
Commissioner of Customs to prohibit them from releasing the importations made
under the Barter Permit No. BT-1380 (SP) in the name of the Philippine Tobacco
Flue-Curing and Redrying Corporation, and to order the respondents Collector of
Customs and Commissioner of Customs to institute seizure and confiscation
proceedings of the importations of tobacco under said Barter Permit No. BT-1380
(SP).
On June 9, 1958 the petitioners filed a motion to be permitted to file new petition for
declaratory relief, in substitution of the petition for prohibition with preliminary
injunction. The principal allegations of the amended petition are as follows: .
That on May 1 to 6, 1958, shipments of 666 hogsheads of Virginia Type Leaf
Tobacco, worth $314,675.62 were imported by the Philippine Tobacco Flue-Curing
and Redrying Corporation under the Barter Permit No. BT-1380 (SP) issued on
January 21, 1958; .
That on May 8, 1958, the Collector of Internal Revenue issued an authority to
release the said imported goods, which authority was addressed to his co-
respondents Hon. Eleuterio Capapas, as Commissioner of Customs and/or Hon.
Isidro Angangco as incumbent Collector for the Port of Manila, declaring that said
666 hogsheads of tobacco were imported under the Barter Permit No. BT-1380 (SP)
dated January 21, 1958 by the No-Dollar Import Office; .
2
That on May 13, 1958 the administrator of ACCFA addressed a communication to
the Commissioner of Customs, Manila, stating that he had no objection to the
release of the imported Virginia leaf tobacco or the release of said 666 hogsheads of
tobacco; .
That the said shipments of 666 hogsheads of tobacco form part of several other
shipments of Virginia Type Leaf Tobacco, which are due to arrive at the Port of
Manila under the same Barter Permit No. BT-1380 (SP) which tobacco will aggregate
in value to the sum of $4,900,000.00; .
That the respondent, Mr. Juan Echiverri, in his capacity as President of the Ilocos
Norte Federation of Facomas, failed miserably to protect the virginia tobacco
producers in failing to register the objections of the different members of the Ilocos
Norte Federation of Facomas against the said importations of virginia leaf tobacco; .
That the Barter Permit No. BT-1380 (SP) issued by the No-Dollar Import Office on
January 21, 1958, in favor of the Philippine Tobacco Flue-Curing and Redrying
Corporation, was issued in violation of the provisions of existing laws, particularly
Republic Act Nos. 1194 and 1410; .
That the certificates issued by the ACCFA and/or the Bureau of Internal Revenue
were false because we have surplusage of indigenous production of Virginia type
leaf tobacco in the Philippines, which is sufficient to maintain the manufacture of
tobacco production; .
That the importations in question are not actually covered by any Central Bank
license whatsoever; .
That as early as January, 1958, petitioners had already protested with the Secretary
of Commerce and Industry against the issuance of barter permits for such kind of
tobacco; .
That the Commissioner of Customs and the Collector of Customs for Manila are in
possession, custody and control of any and all documents pertaining to the
importations made under the aforesaid Barter Permit No. BT-1380 (SP); .
That the Commissioner of Customs and the Collector of Customs threaten to release
the whole or part of said shipment to the Philippine Tobacco Flue-Curing and
Redrying Corporation, some 60 hogsheads having been already released in violation
of existing laws, more specifically Republic Act Nos. 1194 and 1410.1äwphï1.ñët
It is prayed that the court determine —
1. Whether the barter permit in question is legal or valid; .
2. Whether Sec. 1 of Republic Act No. 1194 in relation to Republic Act No. 1410,
permits barter of virginia leaf tobacco; .
3. Whether the administrator of ACCFA can issue a certificate under the law in view
of the actual and existing fact of surplusage in the production of Virginia leaf tobacco;
and .
4. Whether the Virginia leaf tobacco so imported may be forfeited to the government.
The respondents filed their respective answers. Respondent Echiverri, on June 25,
1958, denied the charge that he failed miserably to protect the interests of tobacco
growers.
Harry Stonehill likewise denied all the material allegations of the petition, but
admitted that the barter permit was issued to the PTFRC, after favorable
indorsements were made for its issuance; that several shipments have already been
made to the company under said barter permit; and that a part of said shipments has
already been delivered to the consignee. As special defenses, he claimed that he is
not the real party in interest, the barter license having been issued to the PTFRC, of
which he is only the President, and that the amended petition is not proper because
there was already a breach of the law upon the issuance of the barter permit.
Respondent Jimenez denied all the material allegations of the petition, except the
issuance by the No-Dollar Import Office of the barter permit and his certification
authorizing release of the shipment; and as special defense he alleged that the
subject matter is not justifiable for declaratory relief.
Respondent Quirino also filed his answer, claiming that the barter permit was issued
by him in compliance with a Presidential Directive dated January 13, 1958.
On July 14, 1958, respondents Capapas, Angangco and Arañas filed their joint
answer, denying, like their co-respondents, all the material allegations of the petition.
As special defenses, they claim that the petition states no cause of action against
them individually, and that the petition is improper because there is no justiciable
controversy and there is no violation of law.
3
On November 19, 1958, respondents Capapas, Arañas, Quirino and Stonehill, filed a
joint motion asking the court to set a preliminary hearing on the special defense that
the petition does not state a cause of action for declaratory relief, but the motion was
denied.
After the hearing and on March 12, 1959 the court rendered the decision, which is
now sought to be reviewed, thus;
IN VIEW OF THE FOREGOING, the court finds and so holds that: (1) the
report (indorsement), Exhs. "3-Jimenez", "3 Capapas" and "hh-Intervenors",
of respondent Jimenez recommending the approval of respondent Stonehill's
request to import 10,000,000 lbs. of Virginia leaf tobacco by means of barter
is manifestly against the spirit and letter of Sec. 1 of Republic Act No. 1194
construed in relation to Sec. 6 of Republic Act 1410 and is, therefore, illegal
(2) The Barter Permit No. BT-1380 (Special), Exh. "JJ-1" and "JJ-2"; Exhs.
"2" and "2-A" and "4" and "4-A", issued by respondent Carlos Quirino to the
Philippine Tobacco Flue-Curing and Redrying Corporation of which
respondent Stonehill is the President must necessarily be without legal basis.
(3) The home grown Virginia leaf tobacco cannot be bartered with Virginia
leaf tobacco coming from abroad because the entrance of Virginia leaf
tobacco to the Philippines unless there is insufficiency of home-grown
Virginia tobacco for local consumption is prohibited by Sec. 1 of Republic Act
1194 construed in relation to Sec. 6 of Republic Act No. 1410. Therefore, the
Virginia leaf tobacco imported by the Philippine Tobacco Flue-Curing and
Redrying Corporation of which respondent Stonehill is the President from the
USA by virtue of the said Barter Permit No. BT-1380 (Special) has entered
this country in flagrant violation of the above-mentioned laws and, that being
the case, (4) all of the said Virginia tobacco so far imported as above stated
must be confiscated in favor of the Government in accordance with Sec. 1-e
of Republic Act No. 1194.
In view of the penal provision of Republic Act 1194, the Clerk of Court is
hereby directed to furnish the honorable Secretary of Justice with a copy of
this decision for his information. .
The most important error assigned on the appeal is the ruling of the trial court that
although there has been a breach of the law, as the breach continued and could
continue up to January 21, 1960, when the barter permit would expire, the breach is
not yet complete.
The above ruling of the court is an express violation of Sec. 2 of Rule 66, which
reads as follows:
SEC. 2. — A contract or statute may be construed before there has been a
breach thereof.
In the case of De Borja vs. Villadolid, 85 Phil., pp. 36-39 we held: .
... We are only concerned with the question whether or not the complaint for
declaratory relief filed by plaintiff, and which the Court of First Instance of
Manila dismissed for lack of merit, should be given due course in this Court.
It appears that the Director of the Bureau of Fisheries demanded that plaintiff
pay the license provided in that Act and in view of the insistent refusal of
plaintiff to comply with such demand, he finally turned over the case to the
Office of the Fiscal of the City of Manila for appropriate action. However,
plaintiff, upon learning of the step taken by the Director of the Bureau of
Fisheries countered by filing this complaint for declaratory relief, but this
attitude of the plaintiff will only result in multiplicity of actions which should
always be avoided and the Rules of Court obviously seeks to prevent when,
in section 2 of Rule 66, it provides that the action for declaratory relief must
be brought "before there has been a breach" of a contract or statute the
construction of which is sought.
The facts in this case are so clear and unambiguous, that in the light of said
section 2 of Rule 66, there is nothing left for the courts to adjudicate or
construe regarding the legal rights, duties and status of appellant in the
premises. The general purpose of a declaratory judgment act is to provide for
adjudication of the legal rights, duties, or status of the respective parties. (1
C.J.S., p. 1022; see also 16 Am. Jur., 284; (De Borja vs. Villadolid, 85 Phil.,
pp. 36-39).
Following the above-quoted decision, if an action for declaratory relief were to be
allowed in this case, after a breach of the statute, the decision of the court in the
action for declaratory relief would prejudge the action for violation of the barter law.
The institution of an action for declaratory relief after a breach of contract or statute,
is objectionable on various grounds, among which is that it violates the rule on
multiplicity of suits. If the case at bar were allowed for a declaratory relief, the
judgment therein notwithstanding, another action would still lie against the importer
respondent for violation of the barter law. So, instead of one case only before the
4
courts in which all issues would be decided, two cases will be allowed, one being the
present action for declaratory relief and a subsequent one for the confiscation of the
importations as a consequence of the breach of the barter law.
The impropriety of allowing an action for declaratory relief, after a breach of the law,
can be seen in the very decision of the court itself, which is now subject of the
appeal. Whereas the case at bar was purported to bring about a simple declaration
of the rights of the parties to the action, the judgment goes further than said
declaration and decrees that the importation by the respondent corporation violates
the law, and further directs that legal importation be confiscated under the provisions
the law (Section 1 (c), R.A. No. 1194.) This confiscation directed by the court lies
clearly beyond the scope and nature of an action for declaratory relief, as the
judgment of confiscation goes beyond the issues expressly raised, and to that extent
it is null and void.
That the proper remedy under the circumstances was an action for injunction, and
not one for declaratory relief, is evident from the fact that the original petition was for
injunction; petitioner herein only changed the nature of the action into one for
declaratory relief when, as they explain, they found out that they did not have funds
for the writ of preliminary injunction..
As a final reason for dismissing the present action, we have the undeniable fact that
as of this date (March 1962) the permit had expired two years before (its life
extended to January 21, 1960 only), and all the shipments under the permit had
already been delivered to the consignee and used in the manufacture of tobacco.
The petitioner did not secure a writ of preliminary injunction, as this remedy is not
proper in an action for declaratory relief; as a result, aside from the complete
violation of the barter law, the importations have already been completely used up in
the manufacture of tobacco during the pendency of these proceedings.
Under the circumstances and at present, of what use will a declaration of the rights
of the parties under the barter law be? In fact as of the date of this decision the
issues have become moot and academic and the court can do no other than declare
the action to be so and of no practical use or value.
FOR THE FOREGOING CONSIDERATIONS, judgment appealed from is set aside
and the action for declaratory relief dismissed. Without costs.
 EN BANC
[G.R. No. L-5101. November 28, 1953]
ANGELES S. SANTOS, Petitioner-Appellant, v. PATERIO AQUINO, as Municipal
Mayor of Malabon, THE MUNICIPAL COUNCIL OF MALABON, A. A. OLIVEROS,
as Municipal Treasurer of Malabon, Province of Rizal, Respondents-Appellees.
Arsenio Paez for Appellant.
Ireneo V. Bernardo for Appellee.
SYLLABUS
1. PLEADING AND PRACTICE; DECLARATORY RELIEF. — The action is not for
declaratory relief if the terms of the ordinances assailed are not ambiguous or of
doubtful meaning which require a construction thereof by the Court.
2. ID.; ID.; WHEN SUCH ACTION MAY BE FILED. — Granting that the validity or
legality of an ordinance may be drawn in question in an action for declaratory relief,
such relief must be asked before a violation of the ordinance be committed (section
2, Rule 66).
3. ID.; ID.; PARTIES; REAL PARTY IN INTEREST. — The rule that actions must be
brought in the name of the real party in interest (section 2, Rule 3) applies to actions
brought under Rule 66 for declaratory relief. As to a theater, its owner, and not its
manager, is the real party in interest.
4. ADMINISTRATIVE LAW; MUNICIPAL COUNCIL, NOT A CONSTITUTIONAL
BODY. — Municipal councils are not constitutional bodies but creatures of the
Congress. The latter may even abolish or replace them with other government
instrumentalities.
5. TAXATION; THEATERS, TAXES ON; MUNICIPAL ORDINANCES; ACTION OF
DEPARTMENT OF FINANCE ON ORDINANCES IMPOSING TAXES. —
Commonwealth Act No. 472 grants to the Department of Finance the authority to
disapprove, implied in the power to approve, an ordinance of a municipal council
imposing a tax on theaters which is more than 50 per centum of the existing tax, or to
reduce it, also implied in the same power. This, of course, is to forestall abuse of
power by the municipal councils. If the Congress has granted to the Department of
5
Finance the power to reduce such tax, implied in the power to approve or
disapprove, there seems to be no cogent reason for requiring the municipal council
concerned to adopt another ordinance fixing the rate as reduced by the Department
of Finance. The action of that Department in approving an ordinance of a municipal
council at a reduced rate is not in excess of the powers granted to the Department by
law.
DECISION
PADILLA, J.:
This action purports to obtain a declaratory relief but the prayer of the petition seeks
to have Ordinance No. 61, series of 1946, and Ordinance No. 10, series of 1947, of
the Municipality of Malabon, Province of Rizal, declared null and void; to prevent the
collection of surcharges and penalties for failure to pay the taxes imposed by the
ordinances referred to, except for such failure from and after the taxpayer shall have
been served with the notice of the effectivity of the ordinances; and to enjoin the
respondents, their agents and all other persons acting for and in their behalf from
enforcing the ordinances referred to and from making any collection thereunder.
Further, petitioner prays for such other remedy and relief as may be deemed just and
equitable and asks that costs be taxed against the respondents.
The petitioner is the manager of a theater known as "Cine Concepción," located and
operated in the Municipality of Malabon, Province of Rizal, and the respondents are
the Municipal Mayor, the Municipal Council and the Municipal Treasurer, of Malabon.
The petitioner avers that Ordinance No. 61, series of 1946, adopted by the Municipal
Council of Malabon on 8 December 1946, imposes a license tax of P1,000 per
annum on the said theater in addition to a license tax on all tickets sold in theaters
and cinemas in Malabon, pursuant to Ordinance No. 58, series of 1946, adopted on
the same date as Ordinance No. 61, the same series; that prior to 8 December 1946
the municipal license tax paid by the petitioner on "Cine Concepción" was P180,
pursuant to Ordinance No. 9, series of 1945; that on 6 December 1947, the
Municipal Council of Malabon adopted Ordinance No. 10, series of 1947, imposing a
graduated municipal license tax on theaters and cinematographs from P200 to
P9,000 per annum; that the ordinance was submitted for approval to the Department
of Finance, which reduced the rate of taxes provided therein, and the ordinance with
the reduced rate of taxes was approved on 3 November 1948; that notice of
reduction of the tax rate and approval by the Department of Finance of said
graduated municipal license tax provided for in said Ordinance No. 10, as reduced,
was served on the petitioner on 12 February 1949 when the respondent Municipal
Treasurer presented a bill for collection thereof; that Ordinance No. 61, series of
1946, is ultra vires and repugnant to the provisions of the Constitution on taxation;
that its approval was not in accordance with law; that Ordinance No. 10, series of
1947, is also null and void, because the Department of Finance that approved it
acted in excess and against the powers granted it by law, and is unjust, oppressive
and confiscatory; and that the adoption of both ordinances was the result of
persecution of the petitioner by the respondents because from 20 July 1946 to 8
December 1947, or within a period of less than one and a half years, the Municipal
Council of Malabon adopted four ordinances increasing the taxes on cinematographs
and theaters and imposing a penalty of 20 per cent surcharge for late payment.
A motion to dismiss was filed by the Assistant Provincial Fiscal of Rizal, but upon
suggestion of the Court at the hearing thereof, the respondents were prevailed upon
to file their answer.
In their answer the respondents allege that both ordinances adopted by the
Municipal Council of Malabon are not ultra vires, the same not being under any of the
exceptions provided for in section 3 of Commonwealth Act No. 472; that the
ordinances were adopted pursuant to the policy enunciated by the Secretary of the
Interior in a circular issued on 20 June 1946 which in substance suggested and
urged the municipal councils to increase their revenues and not to rely on the
National Government which was not in a position to render any help and to make
such increase dependent upon the taxpayer’s ability to pay; that both ordinances
assailed by the petitioner had been submitted to, and approved by, the Department
of Finance, as required by section 4 of Commonwealth Act No. 472, and took effect
on 1 January 1947 and 1 January 1948, respectively; that the petitioner had filed a
protest with the Secretary of Finance against such increase of taxes, as fixed by the
municipal ordinances in question but the Department of Finance although reducing
the amount of taxes imposed in Ordinance No. 10, series of 1947, and changing the
date of effectivity of both ordinances, upheld the legality thereof; and that the
petitioner brought this action for declaratory relief with the evident purpose of
evading payment of the unpaid balance of taxes due from the "Cine Concepción." By
way of special defense the respondents allege that the petition does not state facts
sufficient to constitute a cause of action; that the Court has no jurisdiction over the
subject matter of the petition for declaratory relief; that the petitioner should have
paid under protest the taxes imposed by the ordinances in question on "Cine
Concepción" and after payment thereof should bring an action under section 1579 of
the Revised Administrative Code; that this being an action for declaratory relief, the
Provincial Fiscal of Rizal should have been notified thereof but the petitioner failed to
6
do so; that the petition does not join all the necessary parties and, therefore, a
judgment rendered in the case will not terminate the uncertainty or the controversy
that is sought to be settled and determined.
After hearing the Court rendered judgment holding that the ordinances in question
are valid and constitutional and dismissing the petition with costs against the
petitioner. The latter has appealed. This is not an action for declaratory relief,
because the terms of the ordinances assailed are not ambiguous or of doubtful
meaning which require a construction thereof by the Court. And granting that the
validity or legality of an ordinance may be drawn in question in an action for
declaratory relief, such relief must be asked before a violation of the ordinance be
committed. 1 When this action was brought on 12 May 1949, payment of the
municipal license taxes imposed by both ordinances, the tax rate of the last having
been reduced by the Department of Finance, was already due, and the prayer of the
petition shows that the petitioner had not paid them. In those circumstances the
petitioner cannot bring an action for declaratory relief.
Angeles S. Santos, the petitioner, does not aver nor does he testify that he is the
owner or part-owner of "Cine Concepción." He alleges that he is only the manager
thereof. For that reason he is not an interested party. He has no interest in the
theater known as "Cine Concepción" which may be affected by the municipal
ordinances in question and for that reason he is not entitled to bring this action either
for declaratory relief or for prohibition, which apparently is the purpose of the action
as may be gleaned from the prayer of the petition. The rule that actions must be
brought in the name of the real party in interest 2 applies to actions brought under
Rule 66 for declaratory relief. 3 The fact that he is the manager of the theater does
not make him a real party in interest. 4 Nevertheless, laying aside these procedural
defects, we are of the opinion and so hold that under Commonwealth Act No. 472
the Municipal Council of Malabon is authorized and empowered to adopt the
ordinances in question, and there being no showing, as the evidence does not show,
that the rate of the municipal taxes therein provided is excessive, unjust, oppressive
and confiscatory, their validity and legality must be upheld. The rate of the taxes in
both ordinances, to wit: P1,000 a year for "Class A Cinematographs having
orchestra, balcony and loge seats" in Ordinance No. 61, series of 1946, 5 and
P2,000 for each theater or cinematograph with gross annual receipts amounting to
P130,000 or more in Ordinance No. 10, series of 1947, 6 under which the "Cine
Concepción" falls, is not excessive but fair and just. It is far from being oppressive
and confiscatory. Pursuant to said Commonwealth Act if the increase of the
municipal taxes is more than 50 per cent over the previous ones already in
existence, the Municipal Council adopting such increase must submit it for approval
to the Department of Finance which, although it cannot increase it, may reduce it and
may approve it as reduced, or may disapprove it. It is contended that as only
municipal councils are authorized by law to adopt ordinances, after the reduction by
the Department of Finance of the tax rate imposed in Ordinance No. 10, series of
1947, duly adopted by the Municipal Council of Malabon, the latter should adopt
another ordinance accepting or fixing the rate tax as reduced by the Department of
Finance. The contention is without merit, because the rate of taxes imposed on
theaters or cinematographs in Ordinance No. 10, series of 1947, was the only one
reduced by the Department of Finance and the reduction was for the benefit of the
taxpayer as it was very much lower than the rate fixed by the Municipal Council. The
authority and discretion to fix the amount of the tax was exercised by the Municipal
Council of Malabon when it fixed the same at P9,000 a year. Certainly, the Municipal
Council of Malabon that fixed the tax at P9,000 a year also approved the tax at
P2,000 a year, this being very much less than that fixed in the ordinance. The power
and discretion exercised by the Municipal Council of Malabon when it fixed the tax at
P9,000 a year must be deemed to have been exercised also by it when the
Department of Finance reduced it to P2,000 a year, for the greater includes the
lesser. The adoption of another ordinance fixing the tax at P2,000 a year would be
an idle ceremony and waste of time. Moreover, it must be borne in mind that
municipal councils are not constitutional bodies but creatures of the Congress. The
latter may even abolish or replace them with other government instrumentalities.
Commonwealth Act No. 472 grants to the Department of Finance the authority to
disapprove, implied in the power to approve, an ordinance imposing a tax which is
more than 50 per cent of the existing tax, or to reduce it, also implied in the same
power. This, of course, is to forestall abuse of power by the municipal councils. If the
Congress has granted to the Department of Finance the power to reduce such tax,
implied in the power to approve or disapprove, there seems to be no cogent reason
for requiring the municipal council concerned to adopt another ordinance fixing the
tax as reduced by the Department of Finance. Therefore, the action of the
Department of Finance in approving Ordinance No. 10, series of 1947, at a reduced
rate, is not in excess of the powers granted it by law. The evidence does not show
that the adoption of the ordinances in question by the Municipal Council of Malabon
was the result of persecution of the petitioner.

The judgment appealed from is affirmed, with costs against the Appellant.

7

G.R. No. 91500 October 18, 1990
ALLIED BROADCASTING CENTER, INC., petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS and NATIONAL TELECOMMUNICATIONS
COMMISSION, respondents.
GANCAYCO, J.:
This is a petition for the declaration of the unconstitutionality of Presidential Decree
No. 576-A with a prayer for the issuance of a temporary restraining order and/or a
writ of preliminary injunction.
The allegations of the petition are that on January 19, 1960, Republic Act No. 3001
was passed granting petitioner the permit or franchise to construct, maintain and
operate radio broadcasting stations in the Philippines. Petitioner was able to
construct, maintain and operate ten (10) radio broadcasting stations all over the
country. Through said broadcasting stations, petitioner was able to provide adequate
public service which enabled the government to reach the population on important
public issues, and assist the government in programs relating to public information
and education. Its radio stations have never been used for the broadcasting of
obscene or indecent language or speech, or for the dissemination of misleading
information or willful misrepresentation, or to the detriment of the public health, or to
incite, encourage or assist in subversion or treasonable acts.
Under Section 10 of Republic Act No. 3001, petitioner's franchise or permit "shall be
subject to amendment, alteration or repeal by the Congress of the Philippines when
the public interest so requires . ..."
On November 11, 1974, Presidential Decree No. 576-A entitled "Decree Regulating
The Ownership And Operation Of Radio And Television Stations And For Other
Purposes" was issued and duly published in the December 2, 1974 supplemental
issue of the Official Gazette. 1
Sections 3, 4, 5 and 6 of the said Decree provide as follows:
Sec. 3. No person or corporation may own, operate, or manage more
than one radio or television station in one municipality or city; nor
more than five AM and FM radio stations; nor more than five television
8
channels in the entire country, and no radio or television station shall
be utilized by any single-interest group to disseminate information or
otherwise influence the public or the government to serve or support
the ends of such group.
Sec. 4. Any person or corporation which owns more than the number
of radio or television stations authorized in the preceding section shall
divest itself of the excess stations or channels. Any excess station
shall be sold through the Board of Communications.
The divestiture provided herein shall be made not later than
December 31, 1981. Thereafter, a person or corporation shall make
such divestiture within one year from the discovery of the offense.
Sec. 5. Failure to divest as provided in the foregoing section shall, in
addition to the penalties provided in Section 6, subject the person or
corporation guilty of such failure to cancellation of the franchise of
every excess station and to confiscation of the station and its facilities
without compensation.
Sec. 6. All franchises, grants, licenses, permits, certificates or other
forms of authority to operate radio or television broadcasting systems
shall terminate on December 31, 1981. Thereafter, irrespective of any
franchise, grant, license, permit, certificate or other forms of authority
to operate granted by any office, agency or person, no radio or
television station shall be authorized to operate without the authority
of the Board of Communications and the Secretary of Public Works
and Communications or their successors who have the right and
authority to assign to qualified parties frequencies, channels or other
means of Identifying broadcast systems; Provided, however, that any
conflict over, or disagreement with, a decision of the aforementioned
authorities may be appealed finally to the Office of the President
within fifteen days from the date the decision is received by the party
in interest.
Pursuant to Section 6 of the said Decree, all franchises, grants, licenses, permits,
certificates, or other forms of authority to operate radio or television broadcasting
systems/stations, including the franchise or permit of petitioner under Republic Act
No. 3001, have been deemed terminated or revoked effective December 31, 1981.
Thus, petitioner is left with only 3 radio stations located in Iloilo City, Bacolod City
and Roxas City.
Petitioner alleged that said Decree has caused it great and irreparable damage,
because — (a) it divested petitioner of its franchise without due process of law and
forced it to divest itself of some of its radio stations; (b) it deprived petitioner of its
right to further construct, maintain and operate radio broadcasting stations in other
cities or municipalities of the country;2 (c) it deprived petitioner of its right to avail of
loan facilities or renew its existing loan availments from any bank or financial
institution in order to expand and continue the operation of its radio broadcasting
business; and (d) petitioner suffered loss of income.
Hence, this petition to declare Presidential Decree No. 576-A as unconstitutional and
null and void ab initio. The grounds of the petition are as follows:
I THE ISSUANCE OF PRESIDENTIAL DECREE NO. 576-A
SUMMARILY TERMINATING THE PETITIONER'S FRANCHISE OR
PERMIT ON DECEMBER 31, 1981 CONSTITUTES AN UNLAWFUL
TAKING OR DEPRIVATION OF THE PROPERTY RIGHTS
(FRANCHISE OR PERMIT) OF PETITIONER WITHOUT DUE
PROCESS OF LAW AND/OR PAYMENT OF JUST
COMPENSATION;
II. THE ISSUANCE OF THE AFORESAID DECREE FORCED THE
PETITIONER TO DlVEST ITSELF OF SOME OF ITS RADIO
STATIONS AND THE TERMINATION OF ITS CONGRESSIONAL
FRANCHISE CONSTITUTES A VIOLATION AND IMPAIRMENT OF
PETITIONER'S OR THE PEOPLE'S RIGHT OR FREEDOM OF
SPEECH, EXPRESSION AND/OR OF THE PRESS;
III. THE ISSUANCE OF THE AFORESAID DECREE FORCED THE
PETITIONER TO DIVEST ITSELF OF SOME OF ITS RADIO
STATIONS AND THE ARBITRARY TERMINATION OF ITS
CONGRESSIONAL FRANCHISE CONSTITUTES AN UNLAWFUL
IMPAIRMENT OF THE OBLIGATION OF CONTRACT BETWEEN
THE STATE AND THE PETITIONER; AND
IV. THE ISSUANCE OF THE AFORESAID DECREE RESTRICTING
PETITIONER OR ANY OTHER PERSON OR ENTITY TO OPERATE
A CERTAIN NUMBER OF RADIO OR TELEVISION STATIONS IN
ONE CITY OR MUNICIPALITY, OR IN THE ENTIRE COUNTRY FOR
9
THAT MATTER, AND FURTHER TERMINATING THE
CONGRESSIONAL FRANCHISE OF PETITIONER CONSTITUTES
AN UNLAWFUL RESTRAINT OF TRADE; 3
Without giving due course to the petition, the respondents were required to submit
their comment thereto within ten (10) days from notice. After the comment of the
respondents was submitted, the petitioner was required to file a reply thereto. As
said reply was filed the Court required respondents to submit their rejoinder. The
rejoinder of respondents had been duly submitted so the case is now due for
resolution.
After a careful deliberation on the petition, the Court finds the same to be devoid of
merit.
The petition seeks a declaration of the unconstitutionality and/or nullity of
Presidential Decree No. 576-A. As such, it must be treated as one seeking
declaratory relief under Rule 64 of the Rules of Court. Such an action should be
brought before the Regional Trial Court and not before the Supreme Court. A petition
for declaratory relief is not among the petitions within the original jurisdiction of the
Supreme Court even if only questions of law are involved. 4
Thus, the present petition should be dismissed on this score.
Moreover, there is no actual case or controversy involving the law sought to be
annulled. Petitioner does not allege that it has filed an application for a license to
operate a radio or television station in excess of the authorized number and that the
same is being denied or refused on the basis of the restrictions under Presidential
Decree No. 576-A. Petitioner does not also allege that it had been penalized or is
being penalized for a violation under said Decree. There is, likewise, no allegation
that any of the petitioner's stations had been confiscated or shut down pursuant to
Presidential Decree No. 576-A. Obviously, the constitutional challenge is not being
raised in the context of a specific case or controversy wherein the petitioner has
asserted his rights. All that petitioner seeks is the nullification of Presidential Decree
No. 576-A and the reinstatement of its rights under Republic Act No. 3001.
Judicial review cannot be exercised in vacuo. Judicial power is "the right to
determine actual controversies arising between adverse litigants." 5
The function of the courts is to determine controversies between litigants and not to
give advisory opinions. 6 The power of judicial review can only be exercised in
connection with a bona fide case or controversy which involves the statute sought to
be reviewed. 7

Petitioner alleges that it used to maintain and operate at least ten (10) radio
broadcasting stations but pursuant to Sections 3, 4, 5 and 6 of Presidential Decree
No. 576-A it divested itself of the "excess stations" thus leaving it with three (3) radio
stations located in Iloilo City, Bacolod City and Roxas City. Petitioner did not allege
that it challenged the constitutionality of the decree at any time since it took effect on
December 31, 1981. It does not appear that petitioner's compliance was made under
protest. In view of its acquiescence with Presidential Decree No. 576-A, the
petitioner is now estopped from challenging the same under the principle of estoppel
that "one who sleeps on his rights shall not be heard to complain."

The allegation of petitioner that its petition should be treated as a petition for
prohibition does not place petitioner in any better position. The petition cannot be
considered as one for prohibition as it does not seek to prohibit further proceedings
being conducted by any tribunal, corporation, board or person exercising judicial or
ministerial functions. 8

In the instant petition, petitioner does not seek to prohibit any proceeding being
conducted by public respondent which adversely affects its interest. Petitioner does
not claim that it has a pending application for a broadcast license which is about to
be denied under Presidential Decree No. 576-A. Apparently, what petitioner seeks to
prohibit is the possible denial of an application it may make to operate radio or
television stations on the basis of the restrictions imposed by Presidential Decree
No. 576-A. Obviously, the petition is premature.

Petitioner prays for reinstatement of its rights under its original franchise.
Reinstatement is an affirmative remedy and cannot be secured through a writ of
prohibition which is essentially a preventive and not a corrective remedy. It cannot
correct an act that is a fait accompli. 9

WHEREFORE, the petition is DISMISSED with costs against petitioner.

SO ORDERED.

10

G.R. No. L-58340 July 16, 1991
KAWASAKI PORT SERVICE CORPORATION, NAIKAI SHIPPING CO. LTD.,
NAIKAI TUG BOAT SERVICE CO., THE PORT SERVICE CORPORATION,
LICENSED LAND SEA PILOTS ASSOCIATION, HAYAKOMA UNYU K.K., TOKYO
KISEN COMPANY, LTD., OMORI KAISOTEN, LTD., TOHOKU UNYU CO., LTD.
AND SEITETSU UNYU CO., LTD., petitioners,
vs.
THE HON. AUGUSTO M. AMORES, Judge of Br. XXIV, Court of First Instance of
Manila, and C.F. SHARP & CO., INC., respondents.
BIDIN, J.:
This is a petition for certiorari seeking to set aside the orders of the then Court of
First Instance of Manila, * Branch XXIV in Civil Case No. 132077: (a) dated July 13,
1981 denying the special appearances of petitioners as defendants in said case to
question the court's jurisdiction over the persons of the defendants and (b) dated
September 22, 1981, denying the motion for reconsideration of said order.
The antecedents of this case are as follows:
On May 7, 1980, the private respondent C.F. Sharp & Co., Inc. filed a complaint for
injunction and/or declaratory relief in the then Court of First Instance of Manila
against seventy-nine (79) Japanese corporations as defendants, among which are
the petitioners herein. Said complaint was docketed as Civil Case No. 132077. The
complaint alleges, among others, that the plaintiff is a corporation organized and
existing under the laws of the Philippines; that there is another corporation organized
under the law of Japan with the corporate name C.F. Sharp Kabushiki Kaisha; that
the plaintiff and C.F. Sharp Kabushiki Kaisha are in all respects separate and distinct
from each other; that C.F. Sharp Kabushiki Kaisha appears to have incurred
obligations to several creditors amongst which are defendants, also foreign
corporations organized and existing under the laws of Japan; that due to financial
difficulties, C.F. Sharp Kabushiki Kaisha failed and/or refused to pay its creditors;
and that in view of the failure and/or refusal of said C.F. Sharp Kabushiki Kaisha to
pay its alleged obligations to defendants, the latter have been demanding or have
been attempting to demand from C.F. Sharp & Co., Inc., the payment of the alleged
obligations to them of C.F. Sharp Kabushiki Kaisha, notwithstanding that C.F. Sharp
& Co., Inc. is a corporation separate and distinct from that of C.F. Sharp Kabushiki
Kaisha and that the former had no participation whatsoever or liability in connection
with the transactions between the latter and the defendants.
11
As alleged in the complaint, the private respondent prayed for injunctive relief against
the petitioners' demand from the private respondent for the payment of C.F. Sharp
Kabushiki Kaisha's liabilities to the petitioners.
As an alternative to injunction, the private respondent prayed that a judicial
declaration be made that, as a separate and independent corporation, it is not liable
for the obligations and liabilities of C.F. Sharp Kabushiki Kaisha.
Since the defendants are non-residents, without business addresses in the
Philippines but in Japan, the private respondent prayed for leave of court to effect
extraterritorial service of summons.
On June 11, 1980, the respondent judge issued an order authorizing the private
respondent to effect extraterritorial service of summons on defendants therein.
Subsequently, private respondent filed an urgent ex-parte motion dated June 23,
1980 for Extraterritorial Service of Summons Upon Defendants by registered mail
with return cards pursuant to Section 17 of Rule 14 of the Rules of Court.
Acting on said motion, the respondent judge issued an order dated June 30, 1980
granting the motion and authorizing extraterritorial service of summons upon
defendants to be effected by registered mail with return cards.
On March 11, 1981, five of the petitioners, Kawasaki Port Service Corporation,
Naikai Shipping Co., Ltd., Naikai Tug Boat Service Co., Ltd., The Port Service
Corporation and Licensed Land Sea Pilots Association filed their "Special
Appearance to Question Jurisdiction of This Honorable Court Over Persons of
Defendants" contending that the lower court does not and cannot acquire jurisdiction
over the persons of defendants on the grounds that private respondent's action does
not refer to its personal status; that the action does not have for subject matter
property contemplated in Section 17 of Rule 14 of the Rules of Court, that the action
does not pray that defendants be excluded from any interest or property in the
Philippines; that no property of the defendants has been attached; that the action
is in personam; and that the action does not fall within any of the four cases
mentioned in Section 17, Rule 14 of the Rules of Court.
On March 17, 1981, another three of herein petitioners, Hayakoma Unyu K.K., Tokyo
Kisen Company, Ltd. and Omori Kaisoten, Ltd. also filed their special appearance
adopting the same arguments as that of the first five.
On April 28, 1981, the two other petitioners, Tohoku Unyu Co., Ltd. and Seitetsu
Unyu Co., Ltd., filed their "Special Appearance to Question the Jurisdiction of the
Honorable Court" over their persons adopting in toto as theirs the "Special
Appearance" dated March 11, 1981 of Kawasaki Port Service.
On July 13, 1981, the respondent Court issued its order denying said special
appearances. The motion for reconsideration of said order filed by the petitioners
was also denied on September 22, 1981.
Hence, the present petition.
After the required pleadings were filed, the First Division of this Court, in the
resolution of April 14, 1982, gave due course to the petition and required both parties
to submit simultaneous memoranda within thirty (30) days from notice. Both parties
complied by submitting the required memoranda.
The main issue in this case is whether or not private respondent's complaint for
injunction and/or declaratory relief is within the purview of the provisions of Section
17, Rule 14 of the Rules of Court.
The petitioners contend that the respondent judge acted contrary to the provisions of
Section 17 of Rule 14 for the following reasons: (1) private respondent's prayer for
injunction, as a consequence of its alleged non-liability to the petitioners for debts of
C.F. Sharp Kabushiki Kaisha of Japan, conclusively establishes that private
respondent's cause of action does not affect its status; (2) the respondent court
cannot take jurisdiction of actions against the petitioners as they are non-residents
and own no property within the state; (3) the petitioners have not as yet claimed a
lien or interest in the property within the Philippines at the time the action was filed
which is a requirement under Section 17 of Rule 14; (4) extra-territorial service on a
non-resident defendant is authorized, among others, when the subject of the action
is property within the Philippines in which the relief demanded consists in excluding
defendant from any interest therein; and (5) inasmuch as the reliefs prayed for by the
private respondent in the complaint are in personam, service by registered mail
cannot be availed of because Section 17 of Rule 14 authorized this mode of service
only in actions in rem or quasi in rem.
For its part, the private respondent countered that (1) the action refers to its status
because the basic issue presented to the lower court for determination is its status
as a corporation which has a personality that is separate, distinct and independent
from the personality of another corporation, i.e., C.F. Sharp Kabushiki Kaisha of
Japan; (2) under Section 17 of Rule 14, the subject matter or property involved in the
12
action does not have to belong to the defendants. The provisions of said section
contemplate of a situation where the property belongs to the plaintiff but the
defendant has a claim over said property, whether that claim be actual or contingent;
(3) the prayer of the plaintiff that the defendants be excluded from any interest in the
properties of the plaintiff within the Philippines has the effect of excluding the
defendants from the properties of the plaintiff in the Philippines for the purpose of
answering for the debts of C.F. Sharp Kabushiki Kaisha of Japan to the defendants
in accordance with Section 17 of Rule 14; and (4) the action before the lower court is
an action quasi in rem as the remedies raised in the complaint affect the personal
status of the plaintiff as a separate, distinct and independent corporation and relates
to the properties of the plaintiff in the Philippines over which the petitioners have or
claim an interest, actual or contingent.
The petition is impressed with merit.
Section 17, Rule 14 of the Rules of Court provides:
Section 17. Extraterritorial service. — When the defendant does not reside
and is not found in the Philippines and the action affects the personal status
of the plaintiff or relates to, or the subject of which is, property within the
Philippines, in which the defendant has or claims a lien or interest, actual or
contingent, or in which the relief demanded consists, wholly or in part, in
excluding the defendant from any interest therein, or the property of the
defendant has been attached within the Philippines, service may, by leave of
court, be effected out of the Philippines by personal service as under section
7; or by publication in a newspaper of general circulation in such places and
for such times as the court may order, in which case a copy of the summons
and order of the court shall be sent by registered mail to the last known
address of the defendant, or in any other manner the court may deem
sufficient. Any order granting such leave shall specify a reasonable time,
which shall not be less than sixty (60) days after notice, within which the
defendant must answer.
This Court had ruled that extraterritorial service of summons is proper only in four (4)
instances, namely: "(1) when the action affects the personal status of the plaintiffs:
(2) when the action relates to, or the subject of which is, property within the
Philippines, in which the defendant has or claims a lien or interest, actual or
contingent; (3) when the relief demanded in such action consists, wholly or in part, in
excluding the defendant from any interest in property located in the Philippines; and
(4) when the defendant non-resident's property has been attached within the
Philippines." (De Midgely v. Ferandos, 64 SCRA 23 [1975]; The Dial Corporation v.
Soriano, 161 SCRA 737 [1988]).
In the case at bar, private respondent has two (2) alternative principal causes of
action, to wit: either for declaratory relief or for injunction. Allegedly, in both cases,
the status of the plaintiff is not only affected but is the main issue at hand.
As defined, "Status means a legal personal relationship, not temporary in nature nor
terminable at the mere will of the parties, with which third persons and the state are
concerned" (Holzer v. Deutsche Reichsbahn Gesellschaft, 290 NYS 181; cited in 40
Words and Phrases, 129, Permanent Edition).
It is easy to see in the instant case, that what is sought is a declaration not only that
private respondent is a corporation for there is no dispute on that matter but also that
it is separate and distinct from C.F. Sharp Kabushiki Kaisha and therefore, not liable
for the latter's indebtedness. It is evident that monetary obligations does not, in any
way, refer to status, lights and obligations. Obligations are more or less temporary,
but status is relatively permanent. But more importantly, as cited in the case of (Dy
Poco v. Commissioner of Immigration, et al., 16 SCRA 618 [1966]), the prevailing
rule is that "where a declaratory judgment as to a disputed fact would be
determinative of issues rather than a construction of definite stated rights, status and
other relations, commonly expressed in written instrument, the case is not one for
declaratory judgment." Thus, considering the nature of a proceeding for declaratory
judgment, wherein relief may be sought only to declare rights and not to determine or
try issues, there is more valid reason to adhere to the principle that a declaratory
relief proceeding is unavailable where judgment would have to be made, only after a
judicial investigation of disputed issues (ibid). In fact, private respondent itself
perceives that petitioners may even seek to pierce the veil of corporate identity
(Rollo, p. 63).
Finally, the alternative relief sought is injunction, that is to enjoin petitioners from
demanding from private respondent the payment of the obligations of C.F. Sharp
K.K., It was not prayed that petitioners be excluded from any property located in the
Philippines, nor was it alleged, much less shown, that the properties of the
defendants, if any, have been attached.
Hence, as ruled by this Court, where the complaint does not involve the personal
status of plaintiff, nor any property in the Philippines in which defendants have or
claim an interest, or which the plaintiff has attached, but purely an action for
injunction, it is a personal action as well as an action in personam, not an action in
rem or quasi in rem. As a personal action, personal or substituted service of
summons on the defendants, not extraterritorial service, is necessary to confer
jurisdiction on the court. In an action for injunction, extra-territorial service of
summons and complaint upon the non-resident defendants cannot subject them to
the processes of the regional trial courts which are powerless to reach them outside
the region over which they exercise their authority. Extra-territorial service of
summons will not confer on the court jurisdiction or Power to compel them to obey its
orders (Dial Corporation v. Soriano, 161 SCRA 738 [1988] citing Section 3-a Interim
Rules of Court, Section 21, subpar. 1, BP Blg. 129).
Considering that extra-territorial service of summons on the petitioners was
improper, the same was null and void.1âwphi1
WHEREFORE, the petition is Granted and the questioned orders dated July 13,
1981 and September 22, 1981 of the respondent Judge, are Reversed and Set
Aside.
SO ORDERED.

Private respondent alleges that most if not all, of the petitioners have merely
demanded or have attempted to demand from the former the payment of the
obligations of C.F. Sharp K.K., (Rollo, p. 63). Otherwise stated, there is no action
relating to or the subject of which are the properties of the defendants in the
Philippines for it is beyond dispute that they have none in this jurisdiction nor can it
be said that they have claimed any lien or interest, actual or contingent over any
property herein, for as above stated, they merely demanded or attempted to demand
from private respondent payment of the monetary obligations of C.F. Sharp K.K., No
action in court has as yet ensued. Verily, the fact that C.F. Sharp Philippines is an
entity separate and distinct from C.F. Sharp K.K., is a matter of defense that can be
raised by the former at the proper time.
13

G.R. No. L-23645 October 29, 1968
BENJAMIN P. GOMEZ, petitioner-appellee,
vs.
ENRICO PALOMAR, in his capacity as Postmaster General, HON. BRIGIDO R.
VALENCIA, in his capacity as Secretary of Public Works and Communications,
and DOMINGO GOPEZ, in his capacity as Acting Postmaster of San Fernando,
Pampanga, respondent-appellants.
CASTRO, J.:
This appeal puts in issue the constitutionality of Republic Act 1635,1 as amended by
Republic Act 2631,2 which provides as follows:
To help raise funds for the Philippine Tuberculosis Society, the Director of
Posts shall order for the period from August nineteen to September thirty
every year the printing and issue of semi-postal stamps of different
denominations with face value showing the regular postage charge plus the
additional amount of five centavos for the said purpose, and during the said
period, no mail matter shall be accepted in the mails unless it bears such
semi-postal stamps: Provided, That no such additional charge of five
centavos shall be imposed on newspapers. The additional proceeds realized
from the sale of the semi-postal stamps shall constitute a special fund and be
deposited with the National Treasury to be expended by the Philippine
Tuberculosis Society in carrying out its noble work to prevent and eradicate
tuberculosis.
The respondent Postmaster General, in implementation of the law, thereafter issued
four (4) administrative orders numbered 3 (June 20, 1958), 7 (August 9, 1958), 9
(August 28, 1958), and 10 (July 15, 1960). All these administrative orders were
issued with the approval of the respondent Secretary of Public Works and
Communications.
The pertinent portions of Adm. Order 3 read as follows:
Such semi-postal stamps could not be made available during the period from
August 19 to September 30, 1957, for lack of time. However, two
denominations of such stamps, one at "5 + 5" centavos and another at "10 +
5" centavos, will soon be released for use by the public on their mails to be
posted during the same period starting with the year 1958.
14
xxx xxx xxx
During the period from August 19 to September 30 each year starting in
1958, no mail matter of whatever class, and whether domestic or foreign,
posted at any Philippine Post Office and addressed for delivery in this country
or abroad, shall be accepted for mailing unless it bears at least one such
semi-postal stamp showing the additional value of five centavos intended for
the Philippine Tuberculosis Society.
In the case of second-class mails and mails prepaid by means of mail permits
or impressions of postage meters, each piece of such mail shall bear at least
one such semi-postal stamp if posted during the period above stated starting
with the year 1958, in addition to being charged the usual postage prescribed
by existing regulations. In the case of business reply envelopes and cards
mailed during said period, such stamp should be collected from the
addressees at the time of delivery. Mails entitled to franking privilege like
those from the office of the President, members of Congress, and other
offices to which such privilege has been granted, shall each also bear one
such semi-postal stamp if posted during the said period.
Mails posted during the said period starting in 1958, which are found in street
or post-office mail boxes without the required semi-postal stamp, shall be
returned to the sender, if known, with a notation calling for the affixing of such
stamp. If the sender is unknown, the mail matter shall be treated as
nonmailable and forwarded to the Dead Letter Office for proper disposition.
Adm. Order 7, amending the fifth paragraph of Adm. Order 3, reads as follows:
In the case of the following categories of mail matter and mails entitled to
franking privilege which are not exempted from the payment of the five
centavos intended for the Philippine Tuberculosis Society, such extra charge
may be collected in cash, for which official receipt (General Form No. 13, A)
shall be issued, instead of affixing the semi-postal stamp in the manner
hereinafter indicated:
1. Second-class mail. — Aside from the postage at the second-class rate, the
extra charge of five centavos for the Philippine Tuberculosis Society shall be
collected on each separately-addressed piece of second-class mail matter,
and the total sum thus collected shall be entered in the same official receipt
to be issued for the postage at the second-class rate. In making such entry,
the total number of pieces of second-class mail posted shall be stated, thus:
 "Total charge for TB Fund on 100 pieces . .. P5.00." The extra charge shall
be entered separate from the postage in both of the official receipt and the
Record of Collections.
2. First-class and third-class mail permits. — Mails to be posted without
postage affixed under permits issued by this Bureau shall each be charged
the usual postage, in addition to the five-centavo extra charge intended for
said society. The total extra charge thus received shall be entered in the
same official receipt to be issued for the postage collected, as in
subparagraph 1.
3. Metered mail. — For each piece of mail matter impressed by postage
meter under metered mail permit issued by this Bureau, the extra charge of
five centavos for said society shall be collected in cash and an official receipt
issued for the total sum thus received, in the manner indicated in
subparagraph 1.
4. Business reply cards and envelopes. — Upon delivery of business reply
cards and envelopes to holders of business reply permits, the five-centavo
charge intended for said society shall be collected in cash on each reply card
or envelope delivered, in addition to the required postage which may also be
paid in cash. An official receipt shall be issued for the total postage and total
extra charge received, in the manner shown in subparagraph 1.
5. Mails entitled to franking privilege. — Government agencies, officials, and
other persons entitled to the franking privilege under existing laws may pay in
cash such extra charge intended for said society, instead of affixing the semi-
postal stamps to their mails, provided that such mails are presented at the
post-office window, where the five-centavo extra charge for said society shall
be collected on each piece of such mail matter. In such case, an official
receipt shall be issued for the total sum thus collected, in the manner stated
in subparagraph 1.
Mail under permits, metered mails and franked mails not presented at the
post-office window shall be affixed with the necessary semi-postal stamps. If
found in mail boxes without such stamps, they shall be treated in the same
way as herein provided for other mails.
Adm. Order 9, amending Adm. Order 3, as amended, exempts "Government and its
Agencies and Instrumentalities Performing Governmental Functions." Adm. Order
10, amending Adm. Order 3, as amended, exempts "copies of periodical publications
15
received for mailing under any class of mail matter, including newspapers and
magazines admitted as second-class mail."
The FACTS. On September l5, 1963 the petitioner Benjamin P. Gomez mailed a
letter at the post office in San Fernando, Pampanga. Because this letter, addressed
to a certain Agustin Aquino of 1014 Dagohoy Street, Singalong, Manila did not bear
the special anti-TB stamp required by the statute, it was returned to the petitioner.
In view of this development, the petitioner brough suit for declaratory relief in the
Court of First Instance of Pampanga, to test the constitutionality of the statute, as
well as the implementing administrative orders issued, contending that it violates the
equal protection clause of the Constitution as well as the rule of uniformity and
equality of taxation. The lower court declared the statute and the orders
unconstitutional; hence this appeal by the respondent postal authorities.
For the reasons set out in this opinion, the judgment appealed from must be
reversed.
I.
Before reaching the merits, we deem it necessary to dispose of the respondents'
contention that declaratory relief is unavailing because this suit was filed after the
petitioner had committed a breach of the statute. While conceding that the mailing by
the petitioner of a letter without the additional anti-TB stamp was a violation of
Republic Act 1635, as amended, the trial court nevertheless refused to dismiss the
action on the ground that under section 6 of Rule 64 of the Rules of Court, "If before
the final termination of the case a breach or violation of ... a statute ... should take
place, the action may thereupon be converted into an ordinary action."
The prime specification of an action for declaratory relief is that it must be brought
"before breach or violation" of the statute has been committed. Rule 64, section 1 so
provides. Section 6 of the same rule, which allows the court to treat an action for
declaratory relief as an ordinary action, applies only if the breach or violation occurs
after the filing of the action but before the termination thereof.3
Hence, if, as the trial court itself admitted, there had been a breach of the statute
before the firing of this action, then indeed the remedy of declaratory relief cannot be
availed of, much less can the suit be converted into an ordinary action.
Nor is there merit in the petitioner's argument that the mailing of the letter in question
did not constitute a breach of the statute because the statute appears to be
addressed only to postal authorities. The statute, it is true, in terms provides that "no
mail matter shall be accepted in the mails unless it bears such semi-postal stamps."
It does not follow, however, that only postal authorities can be guilty of violating it by
accepting mails without the payment of the anti-TB stamp. It is obvious that they can
be guilty of violating the statute only if there are people who use the mails without
paying for the additional anti-TB stamp. Just as in bribery the mere offer constitutes a
breach of the law, so in the matter of the anti-TB stamp the mere attempt to use the
mails without the stamp constitutes a violation of the statute. It is not required that
the mail be accepted by postal authorities. That requirement is relevant only for the
purpose of fixing the liability of postal officials.
Nevertheless, we are of the view that the petitioner's choice of remedy is correct
because this suit was filed not only with respect to the letter which he mailed on
September 15, 1963, but also with regard to any other mail that he might send in the
future. Thus, in his complaint, the petitioner prayed that due course be given to
"other mails without the semi-postal stamps which he may deliver for mailing ... if
any, during the period covered by Republic Act 1635, as amended, as well as other
mails hereafter to be sent by or to other mailers which bear the required postage,
without collection of additional charge of five centavos prescribed by the same
Republic Act." As one whose mail was returned, the petitioner is certainly interested
in a ruling on the validity of the statute requiring the use of additional stamps.
II.
We now consider the constitutional objections raised against the statute and the
implementing orders.
1. It is said that the statute is violative of the equal protection clause of the
Constitution. More specifically the claim is made that it constitutes mail users into a
class for the purpose of the tax while leaving untaxed the rest of the population and
that even among postal patrons the statute discriminatorily grants exemption to
newspapers while Administrative Order 9 of the respondent Postmaster General
grants a similar exemption to offices performing governmental functions. .
The five centavo charge levied by Republic Act 1635, as amended, is in the nature of
an excise tax, laid upon the exercise of a privilege, namely, the privilege of using the
mails. As such the objections levelled against it must be viewed in the light of
applicable principles of taxation.
To begin with, it is settled that the legislature has the inherent power to select the
subjects of taxation and to grant exemptions.4 This power has aptly been described
16
as "of wide range and flexibility."5 Indeed, it is said that in the field of taxation, more
than in other areas, the legislature possesses the greatest freedom in
classification.6 The reason for this is that traditionally, classification has been a
device for fitting tax programs to local needs and usages in order to achieve an
equitable distribution of the tax burden.7
That legislative classifications must be reasonable is of course undenied. But what
the petitioner asserts is that statutory classification of mail users must bear some
reasonable relationship to the end sought to be attained, and that absent such
relationship the selection of mail users is constitutionally impermissible. This is
altogether a different proposition. As explained in Commonwealth v. Life Assurance
Co.:8
While the principle that there must be a reasonable relationship between
classification made by the legislation and its purpose is undoubtedly true in
some contexts, it has no application to a measure whose sole purpose is to
raise revenue ... So long as the classification imposed is based upon some
standard capable of reasonable comprehension, be that standard based
upon ability to produce revenue or some other legitimate distinction, equal
protection of the law has been afforded. See Allied Stores of Ohio, Inc. v.
Bowers, supra, 358 U.S. at 527, 79 S. Ct. at 441; Brown Forman Co. v.
Commonwealth of Kentucky, 2d U.S. 56, 573, 80 S. Ct. 578, 580 (1910).
We are not wont to invalidate legislation on equal protection grounds except by the
clearest demonstration that it sanctions invidious discrimination, which is all that the
Constitution forbids. The remedy for unwise legislation must be sought in the
legislature. Now, the classification of mail users is not without any reason. It is based
on ability to pay, let alone the enjoyment of a privilege, and on administrative
convinience. In the allocation of the tax burden, Congress must have concluded that
the contribution to the anti-TB fund can be assured by those whose who can afford
the use of the mails.
The classification is likewise based on considerations of administrative convenience.
For it is now a settled principle of law that "consideration of practical administrative
convenience and cost in the administration of tax laws afford adequate ground for
imposing a tax on a well recognized and defined class."9 In the case of the anti-TB
stamps, undoubtedly, the single most important and influential consideration that led
the legislature to select mail users as subjects of the tax is the relative ease and
convenienceof collecting the tax through the post offices. The small amount of five
centavos does not justify the great expense and inconvenience of collecting through
the regular means of collection. On the other hand, by placing the duty of collection
on postal authorities the tax was made almost self-enforcing, with as little cost and
as little inconvenience as possible.
And then of course it is not accurate to say that the statute constituted mail users into
a class. Mail users were already a class by themselves even before the enactment of
the statue and all that the legislature did was merely to select their class. Legislation
is essentially empiric and Republic Act 1635, as amended, no more than reflects a
distinction that exists in fact. As Mr. Justice Frankfurter said, "to recognize
differences that exist in fact is living law; to disregard [them] and concentrate on
some abstract identities is lifeless logic."10
Granted the power to select the subject of taxation, the State's power to grant
exemption must likewise be conceded as a necessary corollary. Tax exemptions are
too common in the law; they have never been thought of as raising issues under the
equal protection clause.
It is thus erroneous for the trial court to hold that because certain mail users are
exempted from the levy the law and administrative officials have sanctioned an
invidious discrimination offensive to the Constitution. The application of the lower
courts theory would require all mail users to be taxed, a conclusion that is hardly
tenable in the light of differences in status of mail users. The Constitution does not
require this kind of equality.
As the United States Supreme Court has said, the legislature may withhold the
burden of the tax in order to foster what it conceives to be a beneficent
enterprise.11 This is the case of newspapers which, under the amendment introduced
by Republic Act 2631, are exempt from the payment of the additional stamp.
As for the Government and its instrumentalities, their exemption rests on the State's
sovereign immunity from taxation. The State cannot be taxed without its consent and
such consent, being in derogation of its sovereignty, is to be strictly
construed.12 Administrative Order 9 of the respondent Postmaster General, which
lists the various offices and instrumentalities of the Government exempt from the
payment of the anti-TB stamp, is but a restatement of this well-known principle of
constitutional law.
The trial court likewise held the law invalid on the ground that it singles out
tuberculosis to the exclusion of other diseases which, it is said, are equally a menace
to public health. But it is never a requirement of equal protection that all evils of the
same genus be eradicated or none at all.13 As this Court has had occasion to say, "if
17
the law presumably hits the evil where it is most felt, it is not to be overthrown
because there are other instances to which it might have been applied."14
2. The petitioner further argues that the tax in question is invalid, first, because it is
not levied for a public purpose as no special benefits accrue to mail users as
taxpayers, and second, because it violates the rule of uniformity in taxation.
The eradication of a dreaded disease is a public purpose, but if by public purpose the
petitioner means benefit to a taxpayer as a return for what he pays, then it is
sufficient answer to say that the only benefit to which the taxpayer is constitutionally
entitled is that derived from his enjoyment of the privileges of living in an organized
society, established and safeguarded by the devotion of taxes to public purposes.
Any other view would preclude the levying of taxes except as they are used to
compensate for the burden on those who pay them and would involve the
abandonment of the most fundamental principle of government — that it exists
primarily to provide for the common good.15
Nor is the rule of uniformity and equality of taxation infringed by the imposition of a
flat rate rather than a graduated tax. A tax need not be measured by the weight of
the mail or the extent of the service rendered. We have said that considerations of
administrative convenience and cost afford an adequate ground for classification.
The same considerations may induce the legislature to impose a flat tax which in
effect is a charge for the transaction, operating equally on all persons within the class
regardless of the amount involved.16 As Mr. Justice Holmes said in sustaining the
validity of a stamp act which imposed a flat rate of two cents on every $100 face
value of stock transferred:
One of the stocks was worth $30.75 a share of the face value of $100, the
other $172. The inequality of the tax, so far as actual values are concerned,
is manifest. But, here again equality in this sense has to yield to practical
considerations and usage. There must be a fixed and indisputable mode of
ascertaining a stamp tax. In another sense, moreover, there is equality. When
the taxes on two sales are equal, the same number of shares is sold in each
case; that is to say, the same privilege is used to the same extent. Valuation
is not the only thing to be considered. As was pointed out by the court of
appeals, the familiar stamp tax of 2 cents on checks, irrespective of income
or earning capacity, and many others, illustrate the necessity and practice of
sometimes substituting count for weight ...17
According to the trial court, the money raised from the sales of the anti-TB stamps is
spent for the benefit of the Philippine Tuberculosis Society, a private organization,
without appropriation by law. But as the Solicitor General points out, the Society is ACCORDINGLY, the judgment a quo is reversed, and the complaint is dismissed,
not really the beneficiary but only the agency through which the State acts in carrying without pronouncement as to costs.
out what is essentially a public function. The money is treated as a special fund and
as such need not be appropriated by law.18

3. Finally, the claim is made that the statute is so broadly drawn that to execute it the
respondents had to issue administrative orders far beyond their powers. Indeed, this
is one of the grounds on which the lower court invalidated Republic Act 1631, as
amended, namely, that it constitutes an undue delegation of legislative power.

Administrative Order 3, as amended by Administrative Orders 7 and 10, provides

that for certain classes of mail matters (such as mail permits, metered mails,
business reply cards, etc.), the five-centavo charge may be paid in cash instead of
the purchase of the anti-TB stamp. It further states that mails deposited during the
period August 19 to September 30 of each year in mail boxes without the stamp
should be returned to the sender, if known, otherwise they should be treated as
nonmailable.

It is true that the law does not expressly authorize the collection of five centavos
except through the sale of anti-TB stamps, but such authority may be implied in so
far as it may be necessary to prevent a failure of the undertaking. The authority given
to the Postmaster General to raise funds through the mails must be liberally
construed, consistent with the principle that where the end is required the
appropriate means are given.19

The anti-TB stamp is a distinctive stamp which shows on its face not only the amount
of the additional charge but also that of the regular postage. In the case of business
reply cards, for instance, it is obvious that to require mailers to affix the anti-TB
stamp on their cards would be to make them pay much more because the cards
likewise bear the amount of the regular postage.

It is likewise true that the statute does not provide for the disposition of mails which
do not bear the anti-TB stamp, but a declaration therein that "no mail matter shall be
accepted in the mails unless it bears such semi-postal stamp" is a declaration that
such mail matter is nonmailable within the meaning of section 1952 of the
Administrative Code. Administrative Order 7 of the Postmaster General is but a
restatement of the law for the guidance of postal officials and employees. As for
Administrative Order 9, we have already said that in listing the offices and entities of
the Government exempt from the payment of the stamp, the respondent Postmaster
General merely observed an established principle, namely, that the Government is
exempt from taxation.
18

G.R. No. L-28138 August 13, 1986
MATALIN COCONUT CO., INC., petitioner-appellee,
vs.
THE MUNICIPAL COUNCIL OF MALABANG, LANAO DEL SUR, AMIR M.
BALINDONG and HADJI PANGILAMUN MANALOCON, MUNICIPAL MAYOR and
MUNICIPAL TREASURER OF MALABANG, LANAO DEL SUR, respondents-
appellants. PURAKAN PLANTATION COMPANY, intervenor-appellee.
YAP, J.:
On August 24, 1966, the Municipal Council of Malabang, Lanao del Sur, invoking the
authority of Section 2 of Republic Act No. 2264, otherwise known as the Local
Autonomy Act, enacted Municipal Ordinance No. 45-46, entitled "AN ORDINANCE
IMPOSING A POLICE INSPECTION FEE OF P.30 PER SACK OF CASSAVA
STARCH PRODUCED AND SHIPPED OUT OF THE MUNICIPALITY OF
MALABANG AND IMPOSING PENALTIES FOR VIOLATIONS THEREOF." The
ordinance made it unlawful for any person, company or group of persons "to ship out
of the Municipality of Malabang, cassava starch or flour without paying to the
Municipal Treasurer or his authorized representatives the corresponding fee fixed by
(the) ordinance." It imposed a "police inspection fee" of P.30 per sack of cassava
starch or flour, which shall be paid by the shipper before the same is transported or
shipped outside the municipality. Any person or company or group of individuals
violating the ordinance "is liable to a fine of not less than P100.00, but not more than
P1,000.00, and to pay Pl.00 for every sack of flour being illegally shipped outside the
municipality, or to suffer imprisonment of 20 days, or both, in the discretion of the
court.
The validity of the ordinance was challenged by the Matalin Coconut, Inc. in a
petition for declaratory relief filed with the then Court of First Instance of Lanao del
Sur against the Municipal Council, the Municipal Mayor and the Municipal Treasurer
of Malabang, Lanao del Sur. Alleging among others that the ordinance is not
only ultra vires, being violative of Republic Act No. 2264, but also unreasonable,
oppressive and confiscatory, the petitioner prayed that the ordinance be declared
null and void ab initio, and that the respondent Municipal Treasurer be ordered to
refund the amounts paid by petitioner under the ordinance. The petitioner also
prayed that during the pendency of the action, a preliminary injunction be issued
enjoining the respondents from enforcing the ordinance. The application for
preliminary injunction, however, was denied by the trial court; instead respondent
19
Municipal Treasurer was ordered to allow payment of the taxes imposed by the
ordinance under protest.
Claiming that it was also adversely affected by the ordinance, Purakan Plantation
Company was granted leave to intervene in the action. The intervenor alleged that
while its cassava flour factory was situated in another municipality, i.e., Balabagan,
Lanao del Sur, it had to transport the cassava starch and flour it produced to the
seashore through the Municipality of Malabang for loading in coastwise vessels; that
the effect of the enactment of Ordinance No. 45-46, is that intervenor had to refrain
from transporting its products through the Municipality of Malabang in order to ship
them by sea to other places.
After trial, the Court a quo rendered a decision declaring the municipal ordinance in
question null and void; ordering the respondent Municipal Treasurer to refund to the
petitioner the payments it made under the said ordinance from September 27, 1966
to May 2, 1967, amounting to P 25,500.00, as well as all payments made
subsequently thereafter; and enjoining and prohibiting the respondents, their agents
or deputies, from collecting the tax of P.30 per bag on the cassava flour or starch
belonging to intervenor, Purakan Plantation Company, manufactured or milled in the
Municipality of Balabagan, but shipped out through the Municipality of Malabang.
After the promulgation of the decision, the Trial Court issued a writ of preliminary
mandatory injunction, upon motion of petitioner, requiring the respondent Municipal
Treasurer to deposit with the Philippine National Bank, Iligan Branch, in the name of
the Municipality of Malabang, whatever amounts the petitioner had already paid or
shall pay pursuant to the ordinance in question up to and until final termination of the
case; the deposit was not to be withdrawn from the said bank without any order from
the court. On motion for reconsideration by respondents, the writ was subsequently
modified on July 20, 1967, to require the deposit only of amounts paid from the
effectivity of the writ up to and until the final termination of the suit.
From the decision of the trial court, the respondents appealed to this Court.
A motion to dismiss appeal filed by petitioner-appellee, was denied by this court in its
resolution of October 31, 1967. Subsequently, respondents-appellants filed a motion
to dissolve the writ of preliminary mandatory injunction issued by the trial court on
July 20, 1967. This motion was also denied by this Court on January 10, 1968.
Of the assignments of error raised by the appellants in their Brief, only the following
need be discussed: (1) that the trial court erred in adjudicating the money claim of
the petitioner in an action for declaratory relief; and (2) that the trial court erred in
declaring the municipal ordinance in question null and void.
The respondents-appellants maintain that it was error for the trial court, in an action
for declaratory relief, to order the refund to petitioner-appellee of the amounts paid by
the latter under the municipal ordinance in question. It is the contention of
respondents-appellants that in an action for declaratory relief, all the court can do is
to construe the validity of the ordinance in question and declare the rights of those
affected thereby. The court cannot declare the ordinance illegal and at the same time
order the refund to petitioner of the amounts paid under the ordinance, without
requiring petitioner to file an ordinary action to claim the refund after the declaratory
relief judgment has become final. Respondents maintain that under Rule 64 of the
Rules of Court, the court may advise the parties to file the proper pleadings and
convert the hearing into an ordinary action, which was not done in this case.
We find no merit in such contention. Under Sec. 6 of Rule 64, the action for
declaratory relief may be converted into an ordinary action and the parties allowed to
file such pleadings as may be necessary or proper, if before the final termination of
the case "a breach or violation of an...ordinance, should take place." In the present
case, no breach or violation of the ordinance occurred. The petitioner decided to pay
"under protest" the fees imposed by the ordinance. Such payment did not affect the
case; the declaratory relief action was still proper because the applicability of the
ordinance to future transactions still remained to be resolved, although the matter
could also be threshed out in an ordinary suit for the recovery of taxes paid (Shell
Co. of the Philippines, Ltd. vs. Municipality of Sipocot, L-12680, March 20, 1959). In
its petition for declaratory relief, petitioner-appellee alleged that by reason of the
enforcement of the municipal ordinance by respondents it was forced to pay under
protest the fees imposed pursuant to the said ordinance, and accordingly, one of the
reliefs prayed for by the petitioner was that the respondents be ordered to refund all
the amounts it paid to respondent Municipal Treasurer during the pendency of the
case. The inclusion of said allegation and prayer in the petition was not objected to
by the respondents in their answer. During the trial, evidence of the payments made
by the petitioner was introduced. Respondents were thus fully aware of the
petitioner's claim for refund and of what would happen if the ordinance were to be
declared invalid by the court.
Respondents' contention, if sustained, would in effect require a separate suit for the
recovery of the fees paid by petitioner under protest. Multiplicity of suits should not
be allowed or encouraged and, in the context of the present case, is clearly uncalled
for and unnecessary.
20
The main issue to be resolve in this case whether not Ordinance No. 45-66 enacted
by respondent Municipal Council of Malabang, Lanao del Sur, is valid. The
respondents-appellants contend that the municipality has the power and authority to
approve the ordinance in question pursuant to Section 2 of the Local Autonomy Act
(Republic Act No. 2264).
Since the enactment of the Local Autonomy Act, a liberal rule has been followed by
this Court in construing municipal ordinances enacted pursuant to the taxing power
granted under Section 2 of said law. This Court has construed the grant of power to
tax under the above-mentioned provision as sufficiently plenary to cover "everything,
excepting those which are mentioned" therein, subject only to the limitation that the
tax so levied is for public purposes, just and uniform (Nin Bay Mining Company vs.
Municipality of Roxas, Province of Palawan, 14 SCRA 661; C.N. Hodges vs.
Municipal Board, Iloilo City, et al., 19 SCRA 28).
We agree with the finding of the trial court that the amount collected under the
ordinance in question partakes of the nature of a tax, although denominated as
"police inspection fee" since its undeniable purpose is to raise revenue. However, we
cannot agree with the trial court's finding that the tax imposed by the ordinance is a
percentage tax on sales which is beyond the scope of the municipality's authority to
levy under Section 2 of the Local Autonomy Act. Under the said provision,
municipalities and municipal districts are prohibited from imposing" any percentage
tax on sales or other taxes in any form based thereon. " The tax imposed under the
ordinance in question is not a percentage tax on sales or any other form of tax based
on sales. It is a fixed tax of P.30 per bag of cassava starch or flour "shipped out" of
the municipality. It is not based on sales.
However, the tax imposed under the ordinance can be stricken down on another
ground. According to Section 2 of the abovementioned Act, the tax levied must be
"for public purposes, just and uniform" (Emphasis supplied.) As correctly held by the
trial court, the so-called "police inspection fee" levied by the ordinance is "unjust and
unreasonable." Said the court a quo:
... It has been proven that the only service rendered by the
Municipality of Malabang, by way of inspection, is for the policeman to
verify from the driver of the trucks of the petitioner passing by at the
police checkpoint the number of bags loaded per trip which are to be
shipped out of the municipality based on the trip tickets for the
purpose of computing the total amount of tax to be collect (sic) and for
no other purpose. The pretention of respondents that the police, aside
from counting the number of bags shipped out, is also inspecting the
 cassava flour starch contained in the bags to find out if the said WHEREFORE, petition is dismissed. The decision of the court a quo is hereby
cassava flour starch is fit for human consumption could not be given affirmed. No costs.
credence by the Court because, aside from the fact that said purpose
is not so stated in the ordinance in question, the policemen of said SO ORDERED.
municipality are not competent to determine if the cassava flour starch
are fit for human consumption. The further pretention of respondents
that the trucks of the petitioner hauling the bags of cassava flour
starch from the mill to the bodega at the beach of Malabang are
escorted by a policeman from the police checkpoint to the beach for
the purpose of protecting the truck and its cargoes from molestation
by undesirable elements could not also be given credence by the
Court because it has been shown, beyond doubt, that the petitioner
has not asked for the said police protection because there has been
no occasion where its trucks have been molested, even for once, by
bad elements from the police checkpoint to the bodega at the beach,
it is solely for the purpose of verifying the correct number of bags of
cassava flour starch loaded on the trucks of the petitioner as stated in
the trip tickets, when unloaded at its bodega at the beach. The
imposition, therefore, of a police inspection fee of P.30 per bag,
imposed by said ordinance is unjust and unreasonable.

The Court finally finds the inspection fee of P0.30 per bag, imposed
by the ordinance in question to be excessive and confiscatory. It has
been shown by the petitioner, Matalin Coconut Company, Inc., that it
is merely realizing a marginal average profit of P0.40, per bag, of
cassava flour starch shipped out from the Municipality of Malabang
because the average production is P15.60 per bag, including
transportation costs, while the prevailing market price is P16.00 per
bag. The further imposition, therefore, of the tax of P0.30 per bag, by
the ordinance in question would force the petitioner to close or stop its
cassava flour starch milling business considering that it is maintaining
a big labor force in its operation, including a force of security guards to
guard its properties. The ordinance, therefore, has an adverse effect
on the economic growth of the Municipality of Malabang, in particular,
and of the nation, in general, and is contrary to the economic policy of
the government.

Having found the ordinance in question to be invalid, we find it unnecessary to rule

on the other errors assigned by the appellants.

21